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NSE Intra-day chart (29 July 2016)
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Market Commentary 01 August 2016
Markets to make a positive start on supportive regional cues


Indian stock indices showed a disappointing performance in Friday's trading session after a resilient show in previous one. Sentiments remained impacted with the Credit rating agency, ICRA stating that the Reserve Bank of India (RBI) is unlikely to cut policy rates in its upcoming monetary policy review on August 9, 2016. It said the central bank is expected to keep rates unchanged for now as the Consumer Price Index (CPI) inflation at around 5.8 per cent in June is close to upper end of the RBI's target of 4 per cent (+/- 2 per cent). Discouraging leads from the Asian markets too proved as a big dampener for the domestic bourses as sentiments were weighed down by the Bank of Japan's policy decision. However, losses remained capped with the report that foreign direct investment (FDI) into the country grew by 7 per cent to $10.55 billion during the first quarter of the current financial year. The sectors, which attracted maximum FDI during the period, included computer hardware and software, services, telecommunications, power, pharmaceuticals and trading business. Investors got some comfort with efforts to hammer out a consensus on the Goods and Services Tax bill gathering momentum. Finance Minister Arun Jaitley and Chief Economic Adviser Arvind Subramanyam held several rounds of talks with leaders from opposition parties. Congress the main opposition described the exercise as 'constructive and positive' and the bill is likely to be tabled in the Rajya Sabha next week. Meanwhile, water levels in 91 major reservoirs in India rose 9 percent in the past week, as heavy rains lashed their catchment areas, but remained lower compared with those at this time last year and the 10-year average. On the global front, Asian markets ended mostly lower on Friday, while European shares advanced in early trade. Back home, the local indices got off to a sedate opening tracking the dismal leads prevailing in Asian markets, as the Bank of Japan acted narrowly on easing policy, avoiding pulling harder on levers on negative interest rates and asset purchases. The selling pressure accentuated in the mid morning trades as investors took to across the board risk aversion. The key gauges made some attempts to claw back into the green zone in early afternoon trades but profit booking at higher levels dragged the key indices to the lowest point in the session. Finally, the BSE Sensex ended lower by 156.76 points or 0.56% to 28051.86, while the CNX Nifty dropped 27.80 points or 0.32% to 8,638.50.


The US markets closed mostly higher on Friday, as Wall Street shook off earlier concerns about sluggish second-quarter domestic growth. Federal Reserve Bank of Dallas President Robert Kaplan called for structural reforms and other fiscal policy to help jump-start the US economy, which he said would give the central bank more operating room to raise interest rates. The US economy grew 1.2% in the second quarter, less than the 2.6% that had been expected by the street. Kaplan added that the numbers underscore the sluggish growth with which the US and global economies have been since the financial crisis. On the economy front, the US economy grew at a slower pace than expected in the second quarter. The tepid 1.2% annual growth rate was due to a large decline in business investment. Meanwhile, first-quarter growth was also reduced to a 0.8% annual rate from the prior estimate of a 1.1% gain. Businesses cut fixed investment by 3.2%, the biggest drop since 2009. And the value of inventories contracted for the first time since 2011, falling by $13 billion. Nor do companies show any sign they soon plan to ramp up investment, one of the three main pillars of economic growth. The Nasdaq added 7.15 points or 0.14 percent to 5,162.13, S&P 500 gained 3.54 points or 0.16 percent to 2,173.60, while Dow Jones Industrial Average lost 24.11 points or 0.13 percent to 18,432.24.


Crude oil futures snapped the losing streak and moved slightly higher on Friday, as the US dollar fell sharply amid weak GDP data and a soaring Yen. Though, crude snapped the month sharply lower. Gains for the day were capped with oil services firm Baker Hughes in its Weekly Rig Count report stating that US oil rigs last week rose by three to 374. It marked the fifth consecutive week of weekly increases among oil rigs nationwide. The overall rig count ticked up by one to 463, as gas rigs fell by two to 89. Benchmark crude oil futures for September delivery closed up by $0.38 or 0.92 percent to close at $41.52 a barrel after trading in a range of $40.58 and $41.66 a barrel on the New York Mercantile Exchange. In London, Brent oil futures for October delivery gained $0.24 or 0.56 percent to $43.47 barrel on the ICE.


Indian rupee strengthened a bit on Friday due to selling of American currency by banks and exporters. Investor s' sentiments got some support with the report that foreign direct investment (FDI) into the country grew by 7 per cent to $10.55 billion during the first quarter of the current financial year. The sectors, which attracted maximum FDI during the period, included computer hardware and software, services, telecommunications, power, pharmaceuticals and trading business. Besides, weakness of the dollar against other currencies overseas boosted the rupee value against the dollar, but losses in the domestic equity market capped the rupee gains. On the global front, yen strengthened against the U.S. dollar after the Bank of Japan's latest measures to boost growth and inflation fell short of investor expectations. Finally, the rupee ended 67.00, 3 paise stronger from its previous close at 67.03 on Thursday


The FIIs as per Friday's data were net buyers in equity and debt segments both. In equity segment, the gross buying was of Rs 8643.01 crore against gross sell of Rs 6632.36 crore. While in the debt segment, the gross purchase was of Rs 1203.51 crore with gross sales of Rs 1144.89 crore. Thus, FIIs stood as net buyers of Rs 58.62 crore in debt.


The US markets continued their consolidation run and ended flat, though Nasdaq extended its recent upward trend to reach its best closing level in a year after Google parent Alphabet reported better than expected second quarter results. The Asian markets have made mostly a positive start as the weaker-than-expected reading on American gross domestic product raised hopes that US Fed will not be hiking rates anytime soon. The Chinese market was in red, as an official gauge showed Chinese manufacturing dropped back into contraction territory in July. The Indian markets suffered sell-off in last session with major averages witnessing cut of over half a percent, today the start of the new week and month is likely to be in green and some recovery can be expected tailing the gains in the other regional markets and eyeing the Manufacturing PMI data. Traders will be getting support with the government listing the Constitutional Amendment Bill for introduction of GST in Rajya Sabha for consideration and passage this week. Union Home Minister Rajnath Singh has expressed confidence over getting the long-pending GST bill passed in Parliament. Meanwhile, Union Finance Minister Arun Jaitley has said that India needs to see if the target of becoming a developed country can be achieved by 2030. He added that the government will always do investment, but investment from private sector will come only if India becomes the best place to invest. Traders will also be getting some support with a survey of industry body Assocham stating that India Inc expects growth in sales and profitability to pick up by the year-end in sync with an uptick in the big macro picture. There will be some buzz in the oil marketing companies, as Petrol price was on Sunday cut by Rs 1.42 a litre and diesel by Rs 2.01 per litre, the third reduction in rates this month on global cues. The steel stocks too will be in action with the Union Minister for Steel Birender Singh stating that the Centre is making all efforts to boost steel production so that India could become the second largest steel producer in the world. There will be lots of important result announcements to keep the markets ticking.


                                Support and Resistance: CNX Nifty and BSE Sensex


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  • Axis Bank, India's third largest private sector bank, has opened a new branch at T Shuya Complex, Chumukedima in Nagaland.
  • UltraTech Cement has participated in the auction of coal linkages for captive power plant sub-sector and won the following linkages from Dipka Mines in the state of Chhattisgarh.
  • Mahindra's Farm Equipment Sector, a part of the $17.8 billion Mahindra & Mahindra, has launched its first custom hiring centre for farm equipment rental business under its 'TRRINGO' initiative.
  • Eicher Motors has reported rise of 69.59% in its net profit after tax at Rs 337.10 crore for the quarter ended June 30, 2016 as compared to Rs 198.77 crore for the same quarter in the previous year.
  • BHEL has bagged prestigious orders for setting up 80 MW of Solar Photovoltaic Power Plants on Engineering, Procurement and Construction basis.
News Analysis